February new-vehicle sales beat expectations

February new-vehicle sales are forecasted to increase year over year as consumer demand remains resilient and leasing is expected to pick up. Total new-vehicle sales are projected to reach 1.12 million units in February, up 4.8% month over month and 5.6% YoY, according to TrueCar . February’s seasonally adjusted annualized rate (SAAR) for total light vehicle sales came in at an estimated 14.5 million, down 3.8% YoY. “It seems that consumer demand is more resilient than many people were expecting given the background of pricing and higher interest rates ,” Zack Krelle, senior manager of OEM analytics at TrueCar, told Auto Finance News . “I think [the industry] was expecting sales to be slightly softer than they were in February, but the sales came in a little higher than they were trending.” TrueCar’s February SAAR forecast comes in above JPMorgan ’s equity research forecast of 14.3 million units but is more conservative than Autodata ’s projection of 15.2 million units and Bloomberg ’s median consensus estimate of 14.7 million units, according to a JPMorgan research note. [caption id="attachment_57334533" align="alignnone" width="2048"] © Can Stock Photo / Greentellect [/caption] Demand resilient in face of elevated rates and pricing Many consumers have been waiting to purchase vehicles amid high interest rates and elevated pricing , but consumers are coming to the market because they can’t wait too long to purchase a vehicle when it’s a necessity, TrueCar’s Krelle said. “At some point, you either need a new vehicle because your existing vehicle gets old or you reach a different life stage. … so people are coming back when there’s more inventory and more choices available,” he said. Leasing volume also is beginning to pick back up as new inventory rebuilds coming off pandemic shortages, according to TrueCar. Leasing for plug-in hybrid and battery electric vehicles made up 27% of market share through January and February, up compared with 12% in the fourth quarter of 2022, while leases on non-EVs increased to 23% since the start of 2023, compared with 21% in Q4. “We’re starting to see leasing act as a middle ground between new and used [vehicles] in a way for a lot of people,” Krelle said. “It keeps some of their monthly costs in check.” Leasing is expected to trend slowly upward throughout the year but not reach pre-pandemic norms of 30%, Krelle said. “It’s probably going to be a slower ramp-up because there’s still a lot of people who prefer to purchase a vehicle through financing.” Meanwhile, industry incentive spend as a percentage of average transaction prices (ATP) is forecasted to tick up 20 basis points MoM to 3.3% in February. ATPs increased 0.2% MoM and 5.2% YoY to $45,645. Auto Finance Summit East, Auto Finance News’ new spring event, is set for May 10-12 at the JW Marriott Nashville featuring a fireside chat with Peter Muriungi, CEO of Chase Auto. Visit autofinance.live.

February new-vehicle sales beat expectations

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